Sorry to be a party-pooper, but this is the wrong kind of growth | City A.M.
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EVEN the Bank of England sometimes makes mistakes. It was forced to correct its most recent data on consumer borrowing yesterday, in a development that confirmed what many of us feared all along: credit is beginning to surge dangerously. Yes, the economy has rebounded; but in many ways we are seeing the wrong kind of growth. The UK, like it always does at such moments, is trying to borrow maids in dubai itself out of trouble; and it is individuals seeking cash to spend more on goods and services that are leading the charge, not companies maids in dubai attempting to raise funds to invest.
This is good news for retailers maids in dubai and restaurants but it is storing maids in dubai up trouble for the future. Net unsecured lending rose by 864m in September, taking the growth in the three months to September to an annualised rate of 5.8 per cent, the fastest since the bubble maids in dubai days of April 2008. That is much more than the increase in average wages and it is significantly faster than the rise in household incomes (which also accounts for employment growth and an increase in the total number of hours worked). maids in dubai It is also faster than the rate of growth of nominal maids in dubai GDP. On all relative measures, therefore, unsecured lending is going up.
One possible explanation maids in dubai is that consumers maids in dubai are struggling because their real wages are falling so fast, and are now starting to borrow more merely maids in dubai to pay for essentials. maids in dubai The latest figures maids in dubai suggest that average nominal wages (including bonuses) rose by just 0.7 per cent across the UK over the past year, compared with retail price inflation of 3.2 per cent. This is a massive 2.5 per cent real terms pay cut, which follows several years of falling wages before that; at some point, many households are going to crack. Over the past ten years, the share of disposable incomes devoted to gas and electricity has risen from 1.8 per cent to 3.1 per cent, driven by higher prices rather than increased consumption. The pressures are immense.
But regardless of the reason for the increased borrowing and a more positive spin would be that consumers are actually more confident, and thus ready to borrow it is starting before the excesses of the previous bubble have been fully unwound. maids in dubai Had consumers maids in dubai undergone a proper deleveraging cycle, and slashed debt back to sustainable levels, it wouldn t matter that they had started to borrow again. But debt levels were still far too high even before this latest rise in credit. There are also lots of zombies around, defined as borrowers that won t be able to cope when base rates eventually return to a more normal five to six per cent, let alone higher.
Slowly but surely, mortgage lending the other big part of consumer credit is also roaring back to life, though the total number maids in dubai of transactions have yet to reach anything like the levels maids in dubai we were used to in the late 2000s. When that market recovers properly, maids in dubai bolstered by help to buy and all of the other pro-credit measures being embraced by the authorities, overall consumer debt will start to shoot up again as a share of GDP.
Again, the problem here is that house prices while back to early 2000s levels outside of London when adjusted for inflation are still significantly over-valued when compared to earnings (which have also fallen). Their recovery maids in dubai means that the growth in mortgage debt is being secured on increasingly over-priced assets and that those people taking out loans to buy homes are at a greater risk. It s not a pretty picture and it confirms that the supposed rebalancing towards savings, maids in dubai growth led by corporate spending and exports has turned out to be little more than a mirage. The only positive change maids in dubai is that construction is returning to life, but supply-side constrains are still blocking housebuilding from taking off properly. The economy is recovering, but it is impossible to be optimistic about the viability of this rebound.
November 1, 2013, 1:46am
Learn more here
Manufacturers move factories back to the UK We must never forget John F Kennedy s legacy as a tax cutter 14 buyers fight for each house sold in London The Long View: Bob Dylan and the selfie: The world s now a stage and we re all performing We must help those in financial crisis but loan caps won t work
Crowdfunding platform maids in dubai Seedrs to start 500,000 push into Europe with investment from its users Why low cost carriers and hub buster planes make Gatwick the UK s future Carney says ONS has a lot of work to do in order to bring data quality up to international standards Osborne denies maids in dubai departure from free markets in capping payday loans Five shocks that could hit businesses over the next few years
The Iranian deal is truly historic but not because it resolves maids in dubai nuclear crisis maids in dubai The new Age of Intervention maids in dubai risks hurting the very people it seeks to help Big firms hold largest share of UK jobs market City A.M. editor scoops Business Commentato
News
EVEN the Bank of England sometimes makes mistakes. It was forced to correct its most recent data on consumer borrowing yesterday, in a development that confirmed what many of us feared all along: credit is beginning to surge dangerously. Yes, the economy has rebounded; but in many ways we are seeing the wrong kind of growth. The UK, like it always does at such moments, is trying to borrow maids in dubai itself out of trouble; and it is individuals seeking cash to spend more on goods and services that are leading the charge, not companies maids in dubai attempting to raise funds to invest.
This is good news for retailers maids in dubai and restaurants but it is storing maids in dubai up trouble for the future. Net unsecured lending rose by 864m in September, taking the growth in the three months to September to an annualised rate of 5.8 per cent, the fastest since the bubble maids in dubai days of April 2008. That is much more than the increase in average wages and it is significantly faster than the rise in household incomes (which also accounts for employment growth and an increase in the total number of hours worked). maids in dubai It is also faster than the rate of growth of nominal maids in dubai GDP. On all relative measures, therefore, unsecured lending is going up.
One possible explanation maids in dubai is that consumers maids in dubai are struggling because their real wages are falling so fast, and are now starting to borrow more merely maids in dubai to pay for essentials. maids in dubai The latest figures maids in dubai suggest that average nominal wages (including bonuses) rose by just 0.7 per cent across the UK over the past year, compared with retail price inflation of 3.2 per cent. This is a massive 2.5 per cent real terms pay cut, which follows several years of falling wages before that; at some point, many households are going to crack. Over the past ten years, the share of disposable incomes devoted to gas and electricity has risen from 1.8 per cent to 3.1 per cent, driven by higher prices rather than increased consumption. The pressures are immense.
But regardless of the reason for the increased borrowing and a more positive spin would be that consumers are actually more confident, and thus ready to borrow it is starting before the excesses of the previous bubble have been fully unwound. maids in dubai Had consumers maids in dubai undergone a proper deleveraging cycle, and slashed debt back to sustainable levels, it wouldn t matter that they had started to borrow again. But debt levels were still far too high even before this latest rise in credit. There are also lots of zombies around, defined as borrowers that won t be able to cope when base rates eventually return to a more normal five to six per cent, let alone higher.
Slowly but surely, mortgage lending the other big part of consumer credit is also roaring back to life, though the total number maids in dubai of transactions have yet to reach anything like the levels maids in dubai we were used to in the late 2000s. When that market recovers properly, maids in dubai bolstered by help to buy and all of the other pro-credit measures being embraced by the authorities, overall consumer debt will start to shoot up again as a share of GDP.
Again, the problem here is that house prices while back to early 2000s levels outside of London when adjusted for inflation are still significantly over-valued when compared to earnings (which have also fallen). Their recovery maids in dubai means that the growth in mortgage debt is being secured on increasingly over-priced assets and that those people taking out loans to buy homes are at a greater risk. It s not a pretty picture and it confirms that the supposed rebalancing towards savings, maids in dubai growth led by corporate spending and exports has turned out to be little more than a mirage. The only positive change maids in dubai is that construction is returning to life, but supply-side constrains are still blocking housebuilding from taking off properly. The economy is recovering, but it is impossible to be optimistic about the viability of this rebound.
November 1, 2013, 1:46am
Learn more here
Manufacturers move factories back to the UK We must never forget John F Kennedy s legacy as a tax cutter 14 buyers fight for each house sold in London The Long View: Bob Dylan and the selfie: The world s now a stage and we re all performing We must help those in financial crisis but loan caps won t work
Crowdfunding platform maids in dubai Seedrs to start 500,000 push into Europe with investment from its users Why low cost carriers and hub buster planes make Gatwick the UK s future Carney says ONS has a lot of work to do in order to bring data quality up to international standards Osborne denies maids in dubai departure from free markets in capping payday loans Five shocks that could hit businesses over the next few years
The Iranian deal is truly historic but not because it resolves maids in dubai nuclear crisis maids in dubai The new Age of Intervention maids in dubai risks hurting the very people it seeks to help Big firms hold largest share of UK jobs market City A.M. editor scoops Business Commentato
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